Nov. 22 (Bloomberg) -- After weathering the collapse of a
$19.5 billion deal in 2009 and the arrest of four executives,
Rio Tinto Group did what you do in China to court better
fortune: It bought a jade horse.

Standing at 1.2 meters, or almost four feet, the statue cut
from the gemstone has a prime view of Shanghai from the
company’s office on the 40th floor of the Wheelock Square
building. It’s meant to help avoid any repeat of the rocky
relationship the world’s second-biggest mining company has had
with China, its largest customer and shareholder.

“When we designed this office, we asked a feng shui master
to give us some guidance” and he said it was very important to
have a jade horse in a pool of water, London-based Rio’s China
managing director Ian Bauert, said in an interview, “So the
good Qi comes in, the good spirit comes in to recirculate and
makes us a prosperous and happy company in China.”

While Rio has lost share to archrival BHP Billiton Ltd. in
China since the trouble welled up in 2009, it nevertheless
increased Chinese sales 72 percent to $19.5 billion in the three
years through June 30. BHP boosted Chinese sales 119 percent to
$21.6 billion in the period.

Since the fallout from 2009, the company has “improved its
position substantially,” said Tim Schroeders, who helps manage
$1 billion at Pengana Capital Ltd. in Melbourne, including Rio
shares. He credited Rio’s efforts without commenting on any
potential luck from the horse, which was built from white jade.

Market Share

Rio, the world’s second-biggest iron ore exporter, competes
with BHP and Brazil’s Vale SA to feed China’s $82 billion a year
appetite for the steelmaking material. With stakes that high,
any help Rio can get to maintain smooth relations with China’s
government is welcome, after the jailing of company executive
Stern Hu two years ago and the collapse of a $19.5 billion
investment deal in 2009.

“Competition for Chinese market share is getting more
fierce,” said Xu Xiangchun, chief analyst with researcher
Mysteel.com, “Having a good relationship with the Chinese
government and steelmakers is critical for the miners.”

Rio’s shares have lost about 5.3 percent in Australian
trading this year, compared with a 2.1 percent decline by BHP
and a 2.9 percent drop in the Bloomberg World Mining Index. The
best performer on the 118-member benchmark was China’s Inner
Mongolia Baotou Steel Rare-Earth Hi-Tech Co., up 77 percent.

The arc in Rio’s fortunes in China date to 1973, when it
says it became the first foreign company to supply iron ore to
the Asian nation. Since then Rio has shipped more than 1 billion
metric tons. China generated sales of about $20 billion in
calendar year 2011, or 33 percent of Rio’s total, and almost
double that of North America, its second-largest market. Rio
doesn’t break out earnings from China.

Skyscrapers Bloom

Rio, BHP and Vale are jostling for an edge in supplying the
world’s fastest-growing major economy with key commodities such
as iron ore, copper and aluminum. By 2030, China will need to
build 50,000 skyscrapers -- equal to ten New York cities -- and
there will be 221 cities with populations of more than 1
million, compared with 35 in Europe today, according to
estimates from the McKinsey Global Institute.

The running jade horse, designed by Beijing-based Taiwanese
artist Huang Zhiyang, is 1.6 meters long and 0.35 meters wide.
It has steel frame set with jade pieces and stands in a pool of
water. In China, water is a symbol of wealth and when spoken the
word has a similar sound to “cai,” a word for money or wealth.

“A horse can reflect the owner’s wish to have swift
changes, or to enhance business quickly,” Hong Chen, a feng
shui master, who didn’t participate in the consultation for Rio
Tinto, said in a phone interview from Beijing, “Jade is
valuable and noble.”

Red River

Feng shui is a traditional Chinese method of arranging the
human and social world in auspicious alignment with the forces
of the cosmos, including qi and yin-yang, according to the
Britannica Concise Encyclopedia. It was devised during the Han
dynasty (206 BC-220 AD) and involves diviners using compass-like
instruments to determine the cosmic forces affecting a site.

On the feng shui master’s advice, the horse is located in
water on the opposite side of the building overlooking the
Jingan Temple, Bauert said. “He said it was very important.”

The earth-red water feature also reflects the origins of
Rio back in 1873. That’s when British and European investors
bought the ancient mines beside the Rio Tinto, or Red River, in
southern Spain, Adam Robarts, co-founder of Beijing-based
Robarts Interiors and Architecture, said in an e-mail. Robarts
was commissioned to design the offices and his clients include
Deutsche Bank AG, the Carlyle Group and Toyota Motor Corp.

The statue with its exposed steel creates “a contemporary
sculpture whilst still evoking the historic Han dynasty running
horse that was its inspiration,” Robarts said.

China Challenges

Back in 2009, Rio, which has been doing business with China
for more than 50 years, ran into deeper water when Hu and three
colleagues were arrested in July, a month after the then debt-laden company rejected a $19.5 billion investment from its
biggest shareholder, Aluminum Corp. of China, or Chinalco.

The arrests raised tensions between Australia and China and
prompted Chief Executive Officer Tom Albanese in August 2009 to
concede his company faced a “number of challenges in China.”

Hu, an Australian citizen, was sentenced in March 2010 by a
court in Shanghai to 10 years jail after being found guilty of
taking bribes from steel mills and infringing commercial
secrets.

Rio’s position is far better than it was after Chinalco’s
failure, said Pengana Capital’s Schroeders. It has made
“substantial efforts to build up goodwill to make sure they
have a package of ongoing business with Chinese because it’s
very important,” he said.

Strategic Partner

Aluminum Corp. of China Ltd., Chinalco’s publicly traded
unit, agreed in July 2010 to pay $1.35 billion for a stake in
Rio’s Simandou iron ore project, making its first investment in
the commodity. Rio and Chinalco also formed a venture in China
last year to look for copper, coal and potash deposits, aiming
“to be a strategic partner to China in the supply, development
and also the discovery of those resources,” according to
Albanese.

“We want Rio Tinto to be a reliable and valued contributor
to China’s long-term development,” said Bauert. “We expect to
spend $1.5 billion this year buying Chinese goods and equipment
for our mining operations and we have joint ventures in
Australian and Guinean iron ore and Chinese exploration with
Chinese partners.”

Rio in January last year opened a Chinese-language website,
which shows a list of Rio Tinto’s global news and its deals with
China, introduces its products, and links to a statement that
said employees shouldn’t be involved in bribery. Vale also runs
a Chinese website, while BHP doesn’t have one.

Buying Fortune

It isn’t just Rio that’s looked to incorporate feng shui
into their offices. Geomancers in feng shui have been consulted
on the design of buildings and offices across the globe.

Such projects range from the Hong Kong headquarters of HSBC
Holdings Plc, Europe’s biggest bank to the Beijing offices of
Freshfields Bruckhaus Deringer LLP, the number two legal adviser
on mergers and acquisitions, and homes being built in
California’s Orange County.

Hong Kong taxpayers paid at least HK$72 million ($9.3
million) over the past decade for feng shui arising from
infrastructure projects, the South China Morning Post reported
in November 2010.

“Consulting feng shui is increasingly being adopted by
overseas companies doing business in China,” Hong Chen said.
“Explicit symbols of feng shui are used in office designs to
catch the attention of their Chinese clients.”